South African Land Reform May Allow for Compensation, ANC Says

(Bloomberg) -- South Africa’s plans to allow for land seizures without compensation will primarily focus on redistributing unused and underutilized property, and may allow for fair payment in some instances, according to a senior ruling-party official.

The government will identify land that isn’t being used and follow a process of consultation before expropriating it within the confines of the constitution and rule of law, Enoch Godongwana, head of the African National Congress’s economic transformation committee, said in an interview on Thursday.

“There is general agreement that expropriation without compensation will be limited in specific instances. That’s what is going to be spelled out in the constitution,” Godongwana said on Bloomberg TV. Only the opposition Economic Freedom Fighters has called for “general expropriation of land without compensation,” he said.

The ANC agreed to the principle of expropriating land without compensation at its national congress in December, without elaborating on how the policy would be implemented. The possible erosion of property rights has spooked investors, farmers’ groups and banks, and triggered a sell-off in the rand. A parliamentary committee is considering possible amendments to the constitution.

Godongwana said the land-reform debate wasn’t the primary reason for the agricultural industry contracting 29 percent in the second quarter -- a major contributor to the country falling into its first recession since 2009.

“One of the poor performers on the gross domestic product figures was agriculture, but that is related to the Western Cape and other provinces’ drought, ” he said. “All agricultural economists are agreed that the debate around expropriation of land without compensation has not yet had an impact on the performance of the sector.”

With elections looming next year, President Cyril Ramaphosa has embraced land expropriation without compensation as a means of addressing racially skewed ownership patterns rooted in colonial and white-minority rule, but insists there won’t be a land grab. Government data shows more than two-thirds of farmland is owned by whites, who constitute 7.8 percent of the country’s 57.7 million people.

The rand appreciated for the first day in four on Thursday, gaining as much as 1.1 percent against the dollar, and was 0.5 percent higher at 15.3401 by 1 p.m in Johannesburg.

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